The waning allure of Ether’s (ETH) status as an investment is attributed to the value drain from the base network by layer-2 solutions and a deficiency in community resistance towards excessive token generation, according to a venture capitalist in the crypto space.
“The primary reason for this is the avaricious Eth L2s extracting value from the L1 and the societal agreement that prodigious token creation was perfectly acceptable,” remarked Nic Carter, a partner at Castle Island Ventures, in a post on X dated March 28.
Ether “perished by its own actions”
“ETH has been overwhelmed by a flood of its own tokens. Perished by its own actions,” Carter noted, in reply to Quinn Thompson, founder of Lekker Capital, who stated that Ether is “entirely dead” as a viable investment.
Source: Quinn Thompson
“A network with a market cap of $225 billion that is experiencing downturns in transaction activity, user advancement, and fees/revenues. There is no case for investment here. As a functional network? Indeed. As an asset for investment? Absolutely not,” Thompson asserted in an X post dated March 28.
The ETH/BTC ratio — which indicates Ether’s comparative strength against Bitcoin (BTC) — stands at 0.02260, marking its lowest point in almost five years, per TradingView metrics.
At the time of this report, Ether is valued at $1,894, a decrease of 5.34% over the past week, according to CoinMarketCap metrics.
Ether has decreased by 17.94% over the last 30 days. Source: CoinMarketCap
In parallel, Cointelegraph Magazine highlighted in September 2024 that revenue generated from fees for Ethereum had “plummeted” by 99% in the preceding six months as “extractive L2s” claimed all users, transactions, and fee income without adding anything to the foundational layer.
Around that same period, Cinneamhain Ventures partner Adam Cochran suggested Based Rollups could address the concern of Ethereum’s layer-2 solutions diminishing liquidity and revenue from the blockchain’s core layer.
Cochran stated that Based Rollups could “directly influence the monetization of Ethereum by implementing a significant modification to incentive structures.”
Related: Ethereum futures premium hits 1+ year low — Is it time to buy the ETH bottom?
Notwithstanding the optimism observed at the conclusion of the previous year regarding Ether potentially attaining $10,000 in 2025 — particularly after hitting $4,000 in December, coinciding with Bitcoin reaching $100,000 for the first time — it has since experienced a steep drop along with the general downturn in the cryptocurrency market.
Standard Chartered contributed to the pessimistic forecast in a client letter dated March 17, lowering their end of 2025 ETH price prediction from $10,000 to $4,000, marking a 60% decline.
Nonetheless, numerous cryptocurrency traders, including pseudonymous operators Doctor Profit and Merlijn The Trader, remain “incredibly optimistic” and contend that Ether could be the “finest opportunity in the market.”
Source: Merlijn The Trader
Magazine: Arbitrum co-founder skeptical of move to based and native rollups: Steven Goldfeder
